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The best private banks in 2008

The best private banks in 2008

An informative guide for high net-worth individuals on the range of service providers that are available

Abigail Hofman

Abigail Hofman

We’re here to save the world and we don’t need any questions

Wednesday, April 16, 2008

NBH deputy governor: Rate hike in March reaction to price shocks.





NBH deputy governor: Rate hike in March reaction to price shocks. The 50bps hike of the base interest rate by the National Bank of Hungary (NBH) at the end of March was a response to the strengthening inflationary expectations, the bank’s deputy governor Julia Kiraly explained. She underlined that the main factor behind surging prices from the beginning of the year were external shocks in the area of food and energy products. Nevertheless, the central bank believed that a reaction was called for as these shocks could entail secondary effects through strengthened inflationary expectations. Another argument behind the rate hike was the sharp increase in the risk premium on forint assets as it could additionally fuel inflation by raising financing costs. Kiraly, however, noted that on the positive side, the forint had appreciated in the past weeks and risk premiums backtracked a bit. Accordingly, we think that her statement could imply that no rate change would be made at this month’s NBH board meeting since a further hike would not be necessary and we believe it is too soon to ease monetary policy.


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